Global Warming And Food Prices

Given that we all have to eat and that there are some concerning environmental developments out there, here’s an interesting question: has global warming led to higher or lower food prices (thus far)?

As always the answer depends on how this affects the balance between supply and demand. Assuming that demand grows steadily each year broadly in line with population (income effects aside), the major price swings should thus come from the supply side.

As we all know growing food is sensitive to variations in the climate, and since discussing future global warming scenarios usually involves some type of natural catastrophe, we speculate that most people would expect that food prices increase as the world gets warmer and vice-versa.

We decided to test this hypothesis using a very narrow set of (oversimplifying) assumptions.

First, let’s start with the measurement of global temperatures. There are several ways to go about this. Given the debate around some ground weather stations being affected by the gradually changing environment around them (such as urbanization, new industrial developments) and their limited geographical representation, we decided to use global temperature data provided by satellite measurements (for both land and sea, since we extract food from both).

This series is regularly updated by the University of Alabama in Huntsville. The graph above shows monthly readings as a deviation from (a positively sloped) trend line since November 1978. The data is fairly noisy but we can note in the first half of the series plenty of cooling observations interspersed with occasional warm spells, and the opposite occurring since the mid 1990s.

The next step is to find a proxy for food prices. We decided to use the Producer Price Index portion for processed foods and feeds in the US (not seasonally adjusted), as provided by the Bureau of Labor Statistics. This series should broadly capture the big picture price swings across all the food categories closer to the end-user in a liberalized market environment (at least compared to other countries). We used the year-on-year change in percentage terms.

Finally, we compare the evolution of the two data series. We smoothed the data using a 13-month (one year) simple moving average, and centered it to account for the (6-month) lag associated with this smoothing procedure. To account for the structural break of globalization our analysis starts in January 1990, which also means that a US price index should become more representative of general tendencies around the world.

From the outset we were not expecting to find any significant relationship given all the noise in both of the series. Moreover, in principle any temperature changes should require some time to be fully reflected in food prices in light of all the supply chain dynamics. Finally, the world experienced a multitude of changes since 1990: increased trade flows, emerging markets coming of age, evolving regulation, fluctuating exchange rates, different consumption patterns, improvements in logistics, higher production efficiencies and so forth.

Still, we did find an intriguing relationship…

Source: University of Alabama in Huntsville, BLS.

The graph above shows the smoothed food price index changes on the left scale and the smoothed satellite temperature anomalies on the right scale (inverted to facilitate the comparison).We have divided periods of warming and cooling as per the peaks and troughs of the latter, by picking the highest and lowest readings with some order of magnitude for that particular phase of the cycle. Therefore, a period of warming is defined as an increase in the smoothed anomaly series and cooling when it decreases, as per the annotations in the graph (again, the scale is inverted).

Notice the evolution of the two series.Warming phases are typically associated with disinflation and at times even deflation (negative growth) of food prices, while cooling phases tend to produce inflation. And this relationship seems to have gotten tighter in recent years, we venture to say because of greater integration of global supply chains and markets.

The latest warming phase started in mid-2011, which curiously roughly coincided with the top in the CRB Commodities Index. Since then food price inflation has been coming down, and is now in negative territory.

Why is that?

Higher levels of carbon in the atmosphere boost plant yields (more production = lower prices, all else equal), but since these have been growing steadily over decades we speculate that the intra-period variations might be attributed to better growing conditions on balance across the globe when it is warmer. And the tighter relationship between the two might be attributed to a more integrated global economy.

The one thing that is clear is that higher temperature anomalies (as per the dataset we used) haven’t produced any major food disasters. On the contrary, our analysis suggests that food availability might have increased as a result.

What does this mean for the future? Should we dismiss the dire warnings of Al Gore and other "alarmists" if the world continues to get warmer?

Perhaps not yet. The severe discontinuities they are predicting could indeed be catastrophic for food production, such as flooding of coastal areas, disruption of normal growing seasons, desertification and so forth. On the other hand, if the world becomes cooler in the coming years (as some predict due to weakening solar cycles) we could experience increased difficulties in providing for an ever expanding population.

Unfortunately the debate around climate change has become highly politicized and emotional, making accurate predictions – and adequate planning – even harder.

Therefore, if warm conditions persist enjoy the cheaper food (until you don’t). Otherwise you might want to jack up your carbon footprint, just in case it gets really cold.

Thank you sir, for adding your laser-like insight into this matter and keeping humanity safe from ridiculous conspiracy theories such as this. For you, the Eye In The Sky, the master astronomer, and only you could keep us little surface dwellers sheltered from storms of misinformation which seek to not only deceive us, but to sap our precious bodily fluids.https://m.youtube.com/watch?v=liqtZY3Pudc

Lol. Critique a scam with another scam. You use the warmest year on record to say that 'global warming must be perfectly linear to be real. Only if temps go up incrementally each year forever can global warming be real.'

Newsflash: There was no winter this year in Eastern Canada, Montana, Ohio (check what PreparedMind101 says about this on youtube), Alberta (check what Mors Kochanski says about this, a man in his 70s who is the most experienced outdoorsman there is), and Moscow. That is YYYYUUUUUGE news, apocalyptic. Whether it be carbon-based industrial excrescence or geoengineering that is the cause, your opinion is irrelevant.

A whole season was lost...

Contrarians and skeptics are merely out to say the opposite of what others say. There can be no truth in such reactions.

Do some research you 'Dimwit' and stop all 'Greenie' 'OOH AAH WE ARE ALL DOOMED' Crap.

From the Archives of the Admiralty London 1817.

“It will without doubt have come to your Lordship’s knowledge that a considerable change of climate, inexplicable at present to us, must have taken place in the Circumpolar Regions, by which the severity of the cold that has for centuries past enclosed the seas in the high northern latitudes in an impenetrable barrier of ice has been during the last two years, greatly abated.

(This) affords ample proof that new sources of warmth have been opened and give us leave to hope that the Arctic Seas may at this time be more accessible than they have been for centuries past, and that discoveries may now be made in them not only interesting to the advancement of science but also to the future intercourse of mankind and the commerce of distant nations.”President of the Royal Society, London, to the Admiralty, 20th November, 1817 ( Royal Society Archives)

Newsflash for the apocalyptic fearmongers: Canada is more habitable for humans if it is warmer. Therefore, if Canada had no winter, and humans are the cause, well congratulations, humanity may have actually increased the growing season in Canada, making them more independent.

Human-induced global warming fearmongers want to be afraid of their own shadows, they don't want to be bothered with hard facts. Here's some hard facts for you:

1) No global warming since 1998, no gas-based model that used "amplifying gasses", like methane and water vapor predicted this. All the models were wrong.

2) The earth was warmer in the past, and as a result of the mild winters and longer growing season, humanity flourished.

3) Humans adapt to whatever is thrown at them, that's how we've survived this long, I see no reason to abandon our species' best asset.

Narrow-minded idiocy. If temperatures increase and the climate becomes significantly more wet or dry then existing species will die out, be damaged, and taken over by invasive species. When the soil disappears and aquifers are ruined there will be an equal decline in crops.

'Humans adapt, therefore whatever they must adapt to is good.' Might as well get it over with and apply this logic to the Fed and nuke plants. Where's your ideological relativism now?

"If temperatures increase and the climate becomes significantly more wet or dry then existing species will die out, be damaged, and taken over by invasive species. When the soil disappears and aquifers are ruined there will be an equal decline in crops."

Total horseshit. I love how fearmongers like yourself just throw around words like "becomes significantly more wet or dry" as if you know exactly what will happen from a change in temperature. You just cling to fear, any fear. You're so wrapped up in fear that you just let your imagination run wild and assume that any change from the status quo "must be bad". You're so stuck on the world ending or some kind of climate imbalance ruining some perfect "utopia" which never existed in the first place, that you cannot see the world for what it is.

It's like you people don't realize that Americans turned a grassland and some savanna-like areas into the most productive farmland the world has ever seen, all with what is effectively terraforming/adaptation. You completely ignore all the man-made structures to help farming we've invented over the centuries. You ignore the fact that people farm in Alaska, a place that has winter 8 months of the year, and that people also farm in what are effectively deserts. You ignore the fact that people with solar power find themselves growing crops inside converted cargo containers... All those present-day and historical examples of adaptation and you still believe that a small change in precipitation or temperature is going to kill off humanity.

The 1930's are calling. It was very hot. Hotter than today. And the 1920s were damn hot too. Hotter than today as well.

I can change all the data I want and make any year look hotter than any other year like NASA and NOAA do by "adjusting" data.

But none of that changes the reality. The observed data doesn't jibe with the theories so the solution is never to adjust the data, but that is what we are told that climate "science" must do because the models must be right.

They aren't because they cannot make accurate predictions about the data that we observe.

so green houses are used to produce more food...with higher CO2 and warmer temps....and somehow that would be bad in nature....versus the year without summer like 1816 where it never warmed up....and lots of people died. Liberals are idiots!